Need for a new economic program
Fatih Özatay, PhD
22 November 2011
The conclusion that Turkey needs a new economic program can be reached easily from many different perspectives. Unemployment rate which escalated during the global crisis has started to fall back to the “usual” 10 percent by the early 2011. Seasonally adjusted unemployment rate for August was announced at 9.6 percent. Though this is (slightly) below the “usual”, we will witness the rate reaching around 10 percent in a month or so. In 2012, in which a substantial fall in growth rate is expected, unemployment rate will reach higher.
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Current account deficit: heads to where?
Fatih Özatay, PhD
19 November 2011
Since we will have difficulty in accessing funds for borrowing, we will invest and consume less. This will contribute to current account balance positively. Last week balance of payments statistics for September were announced. Chief among the striking developments was the worsening of the current account balance. Current account balance can fluctuate remarkably due to seasonality effects. For the purposes of economic analysis, however, adjusted movements matter. For this adjustment, I took into account the seasonal movements for three main current account balance items (namely export of goods, import of goods and net foreign exchange (FX) inflow from tourism and construction services). Second, I took into account the non-energy current account balance that excludes energy payments. Euro
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Germany is against astute ideas
Fatih Özatay, PhD
17 November 2011
One of the astute ideas, one that was opposed to by Germany, was to use the European Financial Stability Funs (EFSF) as a bank. Abundance of astute ideas as Turkey had experienced during the late twentieth century is currently experienced by Europe. There is nothing unusual; they are in trouble and they seek a way out. They are aware that as a primary step, troubled countries have to balance their economies. However, this is not enough and the chief solution is to redesign the Eurozone from scratch. They are aware that “centralization” of fiscal policy also is crucial.
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ECB and CBT
Fatih Özatay, PhD
15 November 2011
The problem creating the finance requirement can be overcome with a comprehensive economic program. In addition, the politicians to implement the program have to be credible. Why does the European Central Bank (ECB) act reluctant to purchase sovereign bonds of troubled countries Italy, Spain, Portugal, Ireland, Greece, and others to be added to the list in order to prevent interest rate hakes? Why do other countries, Germany and Holland among these, oppose to this option?
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Which European Union?
Fatih Özatay, PhD
12 November 2011
Would you like the ECB to impose conditions on Turkey as it may do in the case with Italy, saying “I will purchase your bonds, but you will increase your tax revenues.”? By the end of 2004, the European Union (EU) had defined the conditions for opening Turkey’s accession negotiation, which was an important development for the Turkish economy. It was thought that this perspective would help Turkey to maintain the macroeconomic stability ensured as a result of massive efforts following the 2001 crisis. More importantly, it was hoped that the accession negotiations with the EU and the institutional adjustments to be introduced thereby would contribute to the improvement of Turkey’s potential growth rate, which was expected to enable the convergence with rich economies.
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Questions to the make-up lobby
Fatih Özatay, PhD
10 November 2011
We hope for the help of cosmetics as we cannot lower production costs. But if you overuse the cosmetics, the face will be ruined. Turkey is the fifty first among 182 countries in the ranking of price increases in the period between the beginning of 2005 and the end of 2011. If the ranking is revised on the basis of the rate of inflation in an ascending order, Turkey becomes the 132nd. In short, although we have left behind the high inflation rates of the 1990s, we are not at a good position in this league since other countries fighting with high inflation also succeeded. The beginning of the analysis period is 2005 because it is the year when six digits were omitted from the Lira. This preference of course has a particular importance: “I want to put a bug in ears.” I do not know if I can s
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We need to take inflation seriously
Fatih Özatay, PhD
08 November 2011
Lately, many commentators stopped considering inflation as a key problem. Along with the global crisis, stimulating the financial sector, reviving the volume economic activity and reducing unemployment rate became the prominent objectives. Everyone excluding some weak voices in developed countries stopped talking about inflation. This climate has affected Turkey, too. Many commentators stopped considering inflation as a key problem. With the upwards movement in inflation rate lately, however, the question “will we be facing two-digit inflation rates again?” began to be evoked in our minds.
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Once you hit the road…
Fatih Özatay, PhD
05 November 2011
Unfortunately, at the point we arrived at, maintaining macroeconomic stability has once again become the primary concern. It appears that Papandreou withdrew from this decision to hold a referendum. But he did not declare of the vote of confidence. The outcome of the voting was not definite when I have been writing these lines. Despite his step back, my view that Papandreou has made a wise maneuver did not change as I have stated in my previous commentary. He turned to Greek people and said, “It is your call” easing the burden on his shoulders. Although he did not call for a referendum, the public realized better what they are faced with. Also, he conveyed an important message to the opposition party implying that they have to shoulder the current bailout package together. Otherwise, the c
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How to recover from a gastric disease?
Fatih Özatay, PhD
03 November 2011
Papandreu has manoeuvred successfully against both Sarkozy and Merkel and the Greek people. Across the sea are Kalymnos and Leros islands. There is no visible cargo boat traffic. Is there inertia across our neighbour, Greece? Or is it like this in this time of the year? This makes me wonder if there is any data on “seasonally adjusted cargo boat traffic in Greece”! There is no need for data, anyway. Everyone knows that Greece is in a recession for years. We do not need data on cargo boar traffic on two small Greek islands to validate the recession. These lines might push the limits of courtesy given the circumstances facing our neighbour lately. So, let me ask another question: How would Greek people vote if Papandreu actually held a referendum?
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One variable today, another tomorrow
Fatih Özatay, PhD
01 November 2011
What matters is the impression created by the CBT that the variables that matters changes continuously and the uncertainties raised in such an environment. It is useful to put emphasis on the objective-tool issue once again. For some time now, inflation targeting is cursed and a new monetary policy regime to replace it is being sought. However, the necessary institutional structure is not ready yet. So, today let me try to express myself in the context of the inflation targeting regime at the risk of ending up with a “technical” assessment. In the inflation targeting regime framework, the main objective is to maintain price stability. Any other objective is secondary and comes to the agenda provided that it does not contradict with the main objective. There is a single main poli
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